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Volume 9, Issue 5: January 29, 2007

  1. How Iraq Resembles Algeria
  2. Forgotten Virtues of the Gold Standard
  3. Eland on D'Souza on 9/11
  4. Happy Milton Friedman Day!

1) How Iraq Resembles Algeria

Like U.S.-occupied Iraq, French-occupied Algeria witnessed a brutal insurgency from 1954 to 1962. Aware of the potential similarities, in 2003 the Pentagon reportedly held a special screening of Gillo Pontecovo's classic 1965 film, "The Battle of Algiers." As the film depicts, not only did Algerian guerrilla groups attack French forces, they also attacked each other, explains Independent Institute Senior Fellow Alvaro Vargas Llosa in his latest column for the Washington Post Writers Group.

"The struggle between the NLF [National Liberation Front] and the Algerian National Movement was savage," writes Vargas Llosa. "The NLF targeted fellow Algerians from its inception in 1954 and used indiscriminate terrorism throughout the conflict. Outside influence was considerable: Countries like Tunisia, Morocco and Egypt aided the insurgents."

(Here's another interesting historical fact that Vargas Llosa reports: a young Francois Mitterand laid the legal groundwork at the Ministry of the Justice for the use of torture during the Algerian uprising.)

"Algeria's insurgents were tyrants, and once they liberated their nation they established a dictatorship," Vargas Llosa writes. "But the fact that they were perceived as legitimate by the civilian population -- precisely because their notion of space and time attached them to that population and the country's history -- meant that the occupiers ended up losing the war whose every battle they had won."

"The Battle of Algiers," by Alvaro Vargas Llosa (1/24/07)
"La batalla de Argel"

Center on Global Prosperity (Alvaro Vargas Llosa, Director)

El Independent: El Blog del Centro Para la Prosperidad Global de The Independent Institute

LIBERTY FOR LATIN AMERICA: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa


2) Forgotten Virtues of the Gold Standard

Many writers, historians, and economists -- including Federal Reserve Board Chairman Ben Bernanke -- have blamed “the gold standard” for the inability of the Federal Reserve System to implement countercyclical policies in 1929-33 and thus to prevent the Great Depression. Their blame is misplaced, however, because the self-regulating classical gold standard had been abandoned during World War I and replaced with the government-managed "gold-exchange" standard -- hardly a true gold standard. Worse, these writers have failed to identify the true culprit in the monetary system of that era -- the fallacious "real bills doctrine" that guided Fed policy, according to Richard H. Timberlake Jr., author of “Gold Standards and the Real Bills Doctrine in U.S. Monetary Policy" (THE INDEPENDENT REVIEW, Winter 2007).

“The authentic gold standard provided long-term stability not matched by any other monetary system before or since,” writes Timberlake. “In the interwar period, however, managing gold, as the central bankers tried to do, proved to be a disaster. The gold standard did not succeed; neither did it fail. The issue is not even moot, because the gold standard was not functional. What failed was the theory -- the real bills doctrine -- that U.S. central bankers used in its place to guide monetary policy into the monetary disequilibrium that never ended.”

The classical gold standard fostered relative stability precisely because it was self-regulating and beyond the reach of fumbling central planners, Timberlake explains. Is a Federal Reserve chairman who discounts the differences between various "gold standards" akin to a surgeon who mistakes treating a brain aneurysm for a lobotomy? We hope not, but watch your assets just in case.

To download a copy of “Gold Standards and the Real Bills Doctrine in U.S. Monetary Policy," by Richard H. Timberlake Jr. (THE INDEPENDENT REVIEW, Winter 2007), go to

To purchase print copies of the Winter 2007 issue, subscriptions, and back issues, see

MONEY AND THE NATION STATE: The Financial World, Government, and the World Monetary System, edited by Kevin Dowd and Richard H. Timberlake, Jr.


3) Eland on D'Souza on 9/11

In his latest op-ed, Independent Institute Senior Fellow Ivan Eland takes conservative author Dinesh D'Souza to task for arguing that U.S. foreign policy did not help motivate the September 2001 terrorist attacks on the World Trade Center and the Pentagon. In his latest book, THE ENEMY AT HOME: The Enemy At Home: The Cultural Left and Its Responsibility for 9/11, D'Souza argues that radical Muslims believe their values and aspirations are threatened by policies they believe American progressives are trying to spread abroad, such as abortion rights, contraception for teenagers, and gay rights.

However, according to Eland, director of the Center on Peace & Liberty, most terrorism experts believe that Osama bin Laden facilitated terrorist attacks against the United States not because he opposed American culture, but because he opposed the presence of U.S. forces in the Islamic holy land of Saudi Arabia. (Eland also notes that research by University of Chicago terrorism expert Robert Pape suggests that suicide terrorism is motivated more by nationalist impulses than by religion.)

An analysis like D'Souza's, Eland concludes, "is dangerous because it obfuscates the demonstrated link between interventionist U.S. foreign policy and blowback terrorism and lets politicians and pundits avoid the most obvious solution: a more humble U.S. foreign policy."

See "Demagoguery Posing as Scholarship," by Ivan Eland (1/29/07)

"La demagogía haciéndose pasar por una beca"

THE EMPEROR HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland

Center on Peace & Liberty (Ivan Eland, Director)


4) Happy Milton Friedman Day!

A correspondent for THE NEW YORKER once referred to the 20th century as "the Hayek Century" because the economic individualism espoused by F. A. Hayek, the 1974 Nobel laureate and dean of the Austrian school of free-market economics, ultimately prevailed over the collectivist economic planning that enchanted many politicians, intellectuals, and members of the chattering class until the collapse of the Iron Curtain.

Now Hayek has company. California Governor Arnold Schwarzenegger, San Francisco Mayor Gavin Newsom, and Chicago Mayor Richard M. Daley have declared January 29, 2007, "Milton Friedman Day," in honor of the 1976 Nobel laureate, dean of the Chicago school of free-market economics, and feisty public intellectual who passed away last year on November 16.

According to the official press release commemorating Milton Friedman Day, Schwarzenegger stated: “Milton Friedman helped restore our faith in the freedom of the individual to choose in every sense of the word -- political, economic and social -- and was devoted to the simple idea that we are responsible for our own lives, to live them as we see fit as long as it does not violate the liberty of others.”

Those wondering what the fuss is all about are urged to watch “The Power of Choice: The Life and Ideas of Milton Friedman,” a documentary that will premiere tonight on PBS. Most broadcasts are scheduled for 10 p.m., but the program will also be rebroadcast at other times. Please check your local listings.

Perhaps this will be a good century, after all.

Milton Friedman Day Press Release

Free To Choose Media

"Remembering Milton Friedman" (THE LIGHTHOUSE, 11/20/06)

For more on the politico-economic outlook that Milton Friedman represented, see THE CHALLENGE OF LIBERTY: Classical Liberalism Today, edited by Robert Higgs and Carl P. Close


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